Chuck Brennan’s call for protest against Initiated Measure 21, South Dakota’s new 36% cap in payday loan interest rates, must not be working. Not only has the Dollar Loan Center magnate stopped lending money in South Dakota, but he is also shutting down the Brandon racetrack/concert venue he bought just a year and a half ago and putting it up for sale, along with “several” of his other South Dakota business assets.
Brennan spent millions in April 2015 to buy Huset’s Speedway, then said in June 2015 he was spending $5 million to upgrade the track, seating, infrastructure, and parking. Mocking race drivers who said they’d rather go to Knoxville to compete, Brennan said, “When I get done with this place, it’s going to crush anything they’ve ever done.” In September 2015, Katie Nelson reported that Brennan had a $6-million budget in place for speedway restorations. By August 2016, Brennan was claiming to have spent $10 million upgrading the speedway. That’s the figure he claims in his press release announcing that’s shutting the speedway down and selling it. His asking price: $9.75 million.
Brennan is also willing to take $6 million as a down payment and $1 million each year for the next six years. Compared to the up-front cash price, that six-year payment plan works out to 3.46% interest… probably the lowest interest rate Brennan has ever charged anyone. 3.64% is so low compared to Brennan’s usual 574% that he must find 3.64% indistinguishable from zero: his press release says tha six-year period is “interest free.”
Brennan says the closure is his response to our capping his interest rates. He puts this text in bold in the original statement on the Badlands Motor Speedway website:
On November 8th, 2016, the voters in South Dakota overwhelmingly passed a ballot initiative to eliminate licensed short term lending from the state. Well, that is what we do and our flagship business in South Dakota, Dollar Loan Center, was given only 5 days as a result of the ballot initiative by the State of South Dakota to comply with this change of law. This move by the voters has left hundreds without jobs and tens of thousands without a safe and alternative financial option.
Mr. Brennan has invested and donated well over $100,000,000 in his home state of South Dakota and most of that investment within a mile of where he grew up at 8th Street and Covell Avenue in Sioux Falls.
Because of these recent events, Mr. Brennan is reevaluating his economic presence in South Dakota and will be selling several of his many properties and businesses in the State and diverting that business to the other markets that he currently operates in [Badlands Motor Speedway, press release, 2016.11.30].
Local racers say the closure is not surprising… and it’s not caused by payday loan rate caps:
The track’s listing seems to follow national trends of local tracks shutting their doors, both drivers said. The sport is an expensive one for track owners and drivers, and has to compete for a dwindling fan following.
“It’s a money sport. It takes money to go fast,” [Humboldt racer Dan] Jensen said. “It needs more fans. But it’s hard to spend that money to go (to a race) every weekend.”
Harrisburg racer Jordan Martens agreed.
“Not a lot of fans come to support it anymore,” he said. “Every driver involved in the sport kind of has an idea of where local racing is going. It’s a bummer to see another track go” [Danielle Ferguson, “Badlands Motor Speedway for Sale, Local Drivers React,” that Sioux Falls paper, 2016.11.30].
Brennan’s sales pitch says nothing about the market realities his racers see. “The capacity for events of all kinds, in addition to the best racing in America, is simply staggering,” Brennan claims, “and the opportunity for the new owners group is limitless.”
Brennan, who seems committed to making money any way he can, doesn’t seem like the type who would give up on a viable financial opportunity. He seems more like the type who would blame others to cover up his own business failures. But I suppose it’s possible that his extravagant wealth enables Brennan to go all huffy-puff and throw away his racetrack at an apparent loss, just to flip the bird to an entire state that he perceives as having infringed on his right to exploit poor people…. at which point I would suggest that we make sure Brennan pays his remaining sales and property tax on the way out the door—for good, we can hope.
Of course, $9.75 million isn’t that hard to come up with. We could that much from a mere 20 EB-5 investors who’d like to support the efforts of the South Dakota Regional Center to expand jobs Amusement, Gambling, and Recreation—oh! if only South Dakota hadn’t lost its EB-5 Regional Center designation for corruption!
Looks like I’ll have to cover my own bid. I think I have some spare change on the dresser….
Hit the road Jack.
DONT YOU COME BACK NO MORE NO MORE.
I wonder if the bromance between the Sanford Leader butt kissers and Sharky Brennan still exists now that he’s pulling back on the money sack. Nobody should forget that his Badlands Pawn Ripoff Palace and the speedway investments started until AFTER Hildebrand and Hickey announced they were launching a war against the payday loan shark industry. These were nothing other than phony incentives to patronize voters.
I don’t know what Hildebrand and Hickey will target next. My recommendation is the part of the credit card industry that targets low income families to run up debts they have no hope to repay. Maybe T. Denny might want to take back his name from Sioux Valley Hospital and follow Chucky out the door.
There is some comfort in knowing that as long as you remove the R and the D from their ballot choices, South Dakotans can vote compassionately.
Cory, I suggest you hold off buying until the tax sale, you’ll get it for a fraction of the asking price.
Could Badlands Pawn, and all the stuff that goes with it, is next on Brennan’s chopping block? Who knows at this point. They are still filling the overnight TV airwaves with marathons of their infomercials and they have booked several more bands for the beginning of 2016. That Sioux Falls paper also had a feature on KBAD 94.5 and how it’s apparently topping the Arbitron ratings in Sioux Falls.
I have noticed a few changes that Badland’s management hasn’t publicly talked about. Their in house tattoo parlor has closed, and their website has scrubbed all mention of it. I wonder what happened with that, especially since all the tattoos you can get were Badlands logos. Their in-house deli has removed the “Cleaver’s” name, possibly suggesting Cleaver’s Market is no longer running that, though I could be wrong. They also seemed to have stopped publishing their promotional magazine. Their last issue was from July 14th, it has a cover celebrating the renovation of their now-former speedway. I have all six issues, so if Badlands crumbles down, at least someone will have a record of their short existence.
It would be nice if a former employee (like their former tattoo artist or the former overnight radio hosts Sheriff Vic and Deputy Denise) could come forward and perhaps shed some light on the overall stability of the Badlands empire. Perhaps no one has spoke about the inner workings due to NDAs?
@cah: “That six-year payment plan works out to 3.46% interest… probably the lowest interest rate Brennan has ever charged anyone.”
The current WSJ rate at which banks will lend money to their most-favored, credit worthy customers is currently 3.5%. Sounds like Brennan is charging market rates.
Of course people who visit his payday loan center certainly aren’t credit worthy and probably have a FICO credit score lower than the temperature of boiling water, They couldn’t even hope to qualify for those rates. Yet, while the banks and credit unions won’t give them a first look, Brennan loans to them.
So Brennan is guilty of a little boosterism. So what? I can’t blame him for taking his bat and ball back home since South Dakota obviously doesn’t want him doing business here. So it goes.
A little boosterism? Baloney. That whiny crybaby expected voters to be suckers. The dirt track and pawn shop expenditures were entirely self-serving to Brennan. But he used them as chits in this political game to seek a favor from voters. It lacked class and was immediately transparent to voters who are sick of being patronized. Brennan has been flushed down the toilet by voters. Don, your prowess with a plunger arrives too little, too late.
Is this what we can now call South Dakota’s version of ‘draining the swamp’?
Cory–really clever juxtaposition of interest rates that Brennan is charging for Huset’s and what he’s charging his payday customers! DFP is worth reading for a lot of reasons, but one of them is the truly creative (and funny, sometimes) connections you make!
This has little to do with our rate cap though he’s using it to save face for these hemorrhaging business ventures he gambled on. Lots of chatter in Sioux Falls that the model isn’t viable, 5 cars in the parking lot, not the regional tourist destination he’d hoped for, no TV contract, pawn prices higher than new, etc.
Never went to a race at the speedway – even the free race they had last summer. Badlands Pawn is a conglomeration of businesses under one roof. I like the pawn shop deli. Very good food, but I don’t eat there that often because I’m kind of cheap when it comes to lunch. I have attended one concert at the pawn shop, but I haven’t bought any merchandise there. I like the gun shop and the shooting range, but I haven’t bought anything there – yet – but I’m thinking of ordering myself a Christmas present from out-of-state and having it shipped there. The gun shop is busy, and viable. The size of the pawn shop building and number of staff can’t be supported by the business volume unless pawn business has picked up significantly since payday loans stopped. And I question if the concerts, as cool as they are, turn a profit. The radio station is excellent if you’re a rock fan, and the ratings show it. That will remain in business. Unmentioned is the lawsuit regarding the second radio station Brennan bought then reneged on the deal. Not sure if that case is still going, but it will probably cost Brennan some money. All in all Brennan brought some cool entertainment options to SF that really didn’t have a good business case just because he’s from here and wanted to give something back. The Brennan Rock and Roll Academy is an example of that. I hope that stays open. I was one of the 75%. I will miss the things that close, and I understand why he would take his money elsewhere. But I don’t regret my vote.
I agree with Steve that it isn’t DIRECTLY related to the rate cap (#1), disagree it is related to saving face (#2), and agree it is related to the cash flow of the investments (#3).
1). These are two separate businesses without discernible synergy. Business decisions are independent.
2). Like or dislike Brennan or any of his businesses, he doesn’t seem to be a man motivated by adulation but business. It is a business decision. Also the assertion he is “flipping the bird” is ludicrous. Been around business owners a lot wealthier than Brennan and never see a single one “flip” this kind of money because they are mad.
3). It didn’t take a MBA to surmise these business endeavors would eat cash to build (eating cash during its startup phase doesn’t make them bad businesses. Most businesses do). However, the cash flow (or asset base) of the payday lending may have been the source of cash for #2. If so, the loss of the pay day lending may be the indirect cause of the selling of these assets.
4). Or Steve may be right he came to the conclusion they were bad business decisions.
But whether #3 or #4 is right nobody not intimate with Brennan’s actual business information knows. We only know one fact. The speedway is being sold or closed and everything else is non-informed speculation.
So Brennan is guilty of a little boosterism. So what? I can’t blame him for taking his bat and ball back home since South Dakota obviously doesn’t want him doing business here. So it goes.
Gee, I’d bet Missouri wished they got that kind of boosterism from the James gang back in the day.
$9.5 million is only 19 Chinese green card buyers.
The speedway is being sold or closed and everything else is non-informed speculation.
Speculation? Pretty much like your entire post, eh, Troy?
Brennan isn’t too concerned about his poor business decision to invest in Sioux Falls since he’s already astronomically wealthy. It’s kind of like the game Monopoly for him.
This was all just probably a tax write off for him anyway to do this in the first place.
MFI,
Yes. Speculation. But, I guarantee all I said has more background information (not direct but real life knowledge of how business decisions are made) of everything else said except Rors direct assessment via personal experience.
For example, cory’s perception Brennan to be a person “willing to make money any way he can” then conflicts with his subsequent speculation. If he really believed that, the only rational speculation is #3 (a possibility I raised) or #4 (raised by Steve which may be correct) and the accuracy of either is something only Brennan and those with intimate information know.
Here’s another thing I forgot to mention in my original comment, which has some glaring grammar errors due to me being a bit tired.
I watched the Morning Crash on Black Friday, when the pawn shop had their big sale. After the doors opened at 8am, there were hardly any people on the pawn floor as shown by the live camera feeds. It’s seems that the pawn shop portion isn’t performing as well as the radio station or concerts. Reviews seem to suggest the prices of pawned items aren’t the best, and their branded merchandise is expensive. I have been to Badlands Pawn myself, but that was not long after they opened. I am going there again this weekend so I will see how true these reviews are and also to see just how many people go there on a typical weekend.
Chuckie is like a broken toy
Tax Sale? You guys are hilarious or maybe delirious if you think that. The pawn shop/concert venue and the speedway were nothing more than Chuck having fun with his money. Everyone knows the speedway was a money pit as local racing has been dying for years. The pawn shop was just a business that could operate while his concert venue wasn’t operating which he was more than willing to sink money into even if it was a loss because he loves music. If they do well, good…if they don’t, that’s a hefty tax write off. He doesn’t care if he sells it all and moves away and does the same thing elsewhere. He could do it 10 times over and still have more money than all the commenters on this blog combined. Don’t confuse good business decision with just a rich person playing with the money he earned. I’d prolly do the same with a business I liked if I was that loaded. I’d prolly build an amusement/water park and never make enough to justify it’s size but who cares. You can’t take that money with you when you are dead. That’s his choice and if he goes and spoils a different city, don’t be surprised. He will continue to throw money at the things he likes, it just won’t be in SD. All I can say is I will miss that concert venue, everything else I could care less about.
He could do it 10 times over and still have more money than all the commenters on this blog combined
WTF? I bet he has boogers in his nose, just like the rest of us.
A lot of people will start building investments to write off on their taxes. Mayo Clinic does this all the time, Daniel. Towards the end of the year, they will start a building project to avoid certain taxes that will come due the following year.
Businesses do this all the time.
unethical businesses should shut down, either by lose of customers of government action or both. The voters are not as one sided politically as it might seem by looking at the legislature.
96 makes a great point about Brennan’s timing and motivations. Brennan didn’t contribute any money that we know of the ballot question committees… apparently because he decided to focus his cash on other means of persuasion. Perhaps we need to count the millions he spent on Huset’s as a campaign contribution?
Ah, and by pouring his millions into Huset’s for PR instead of directly contributing to the anti-21/pro-U campaign, Brennan gets to write off those dollars as business expenses.
Wade, interesting notes about the apparent scale-backs at the pawn shop. On the apparently ratings-topping radio station: has Brennan resolved his lawsuit with Sunny Radio yet?
Brennan sure made a lot of noise about wanting to give back to South Dakota and be a bigger benefactor than T. Denny Sanford. He said that his payday loan stores in South Dakota only made up 5% of his total payday lending business nationwide. One would thus think that the loss of such a minor profit center would not affect a true philanthropist’s commitment to helping his home state.
But we know that’s not the case. “A little boosterism”, Don? Ha. Boosting himself is all Brennan is about. His promises of philanthropy were all bluster and marketing. His actions now, rightly called crybabyism by 96, proves it.
Troy, if it’s not bird-flipping, then I’d say it’s worse. If Brennan was counting on payday loans to support all those other cash-bleeding ventures, then his exploitation of the poor is all the more reprehensible. Not only was he charging the interest rates necessary to sustain the basic short-term lending business model and provide the service you say the poor need, but he was piling other charges on top of that to cover costs related to his own outside business gambles. No reading of the information before us makes Brennan look like a titan of business or morality.
CH,
Your 11:25 and 11:27 comments don’t make sense from a business and political perspective.
Political: Advertising is going to be alot more effective and direct than an investment in unrelated businesses. I would be surprised if more than a couple of hundred people voted against the IM because of the pawn shop or speedway.
Business: Losing on $10mm on an investment to get a $3mm reduction in taxes is bad business. Nobody makes decisions ever for the write-off. The various “schemes” which allowed a reduction in taxes close to the loss in investment died in 1986. The myth continues only because people don’t understand how write-offs work.
If you have good knowledgable tax accounts there are many ways businesses can take advantage of the system and especially in tax friendly SD.
Hang on, Troy. If I make $15M (remember, $10M was the renovation cost; I haven’t seen the purchase price listed, but let’s assume $5M) in business income and I choose to spend it on a political campaign, there’s no deduction at all. If I spend that $15M on business expenses, I write that off and don’t pay taxes on it. Now sure, as a rational businessman, I recognize I have a third option: don’t spend the money on either boondoggle; invest it in a going enterprise or on a bunch of hot dogs or something else that I’ll really enjoy.
But if I see the voters of South Dakota gearing up to shut down my $20M/year profit stream (I’m guessing—do we have numbers on how much money Dollar Loan Center squeezed out of South Dakotans last year?), I might budget $15M to persuade the voters to leave my business alone. Again, as a rational businessman, I’d probably take your advice and invest in direct political advertising.
But I’m not Chuck Brennan, and no one here has convinced me Chuck Brennan is always rational. Whatever motivated buying Huset’s—the 36% rate cap, his ego, boyhood fantasies, whatever—it doesn’t appear to have been a rational, money-making decision. So his thinking could well have gone, “Well, I’ve got to do something about IM21, but voters have approved rate caps in other states, against advertising by the industry, so maybe I need to try a different approach. I know! I’ll push my brand, portray myself as a great philanthropist! It’s working for T. Denny Sanford! Maybe it’ll work for me! Beating IM 21 is a longshot no matter what, but at least if I pour my money into ‘business expenses,’ I’ll lower my tax bill.”
@cah: “If I spend that $15M on business expenses, I write that off and don’t pay taxes on it.”
Brennan’s purchase of Huset’s and the renovation money spent on it cannot be considered “business expenses” (which can be written off in the year they occur) but capital expenditures that would have to be written off through years of depreciation. And when that business is sold, some of the allowed depreciation will have to be rolled back into the base price to determine whether there is a capital gain/loss. The business and tax knowledge on display in this thread is beyond atrocious.
Coyote, you left out Section 179 and bonus depreciation considerations in your tax analysis, both of which can result in immediate deductions in the year of new equipment purchases. I hate it when Cory doesn’t do a full CPA analysis when he throws out a comment.
Sounds like a bunch of part-timers have lost their jobs as of today at KBAD radio. Not sure about the actual pawn shop. Many of my friends that worked at various media outlets in town went to work for Chuckie and my thought was that they will probably regret it. I pass by that eyesore many times per week and I’ve never been impressed by the number of cars in the lot. Most of the time thoroughly un-impressed. I agree with the posts that he may be using the rate cap as an excuse to cover his large a** for a failing business. I wonder how city leaders feel now after embarrassingly sucking up to Brennan when he started this whole thing.
Also, I just re-read the article from “that Sioux Falls paper” about the radio ratings. KBAD came in third. Not bad, but not #1. And with his usual hyperbole, Chuckie says “KBAD just crushed it,” Brennan said. “We knew we had a pretty good station going, but we had no idea how dominant we were going to be. It’s really unbelievable.” Being #3 with a 7% market share is definitely not “dominant”.
@Darin Larson: A race track wouldn’t be considered qualified real estate under Section 179 rules. Also bonus depreciation is usually limited to personal property such as equipment, tools, computers, software, store fixtures, etc not real property or improvements made to real property. Here’s hoping you aren’t a tax attorney or CPA.
Don, also Section 179 is limited to $500K and to one who doesn’t spend $2mm a year on Section179 qualified assets. But heck, shouldn’t be surprised. These people think people do dumb things motivated by a write off.
CH,
Maybe he is irrational but I have never met anyone who succeeded in business who was irrational. Business is the ultimate reality endeavor as all dreams/decisions have to be made real and make sense in the market. What you suggest doesn’t make sense to me.
All that makes sense to me is either #3 or #4 I described above.
P.S. I have no ideas what he made in SD at his centers but I doubt it was that much or he would have had more competition. I don’t think we have 10 banks in SD that make that much money.
Coyote and Troy, all I said was that you hadn’t considered 179 and bonus depreciation in your analysis of new equipment purchases. I’m quite aware that they do not apply to real estate! So, he spend 10 or 15 million on this joint and he didn’t buy any new equipment? When can I stop by to get my taxes done? ROTFLMAO
Troy and Coyote know very well that if one has top notch tax accountants you can take advantage of the system.
Heck they’re the ones that think all welfare recipients are corrupted lazy criminals that work the system to benefit them.
But Chuck Brenna, no, no, no! Oh he would never take advantage of tax friendly SD. Never.
And don’t get me started on how Donald Trump was able to shamelessly take advantage of tax loopholes.
Darin, if he spent $2.5 million of equipment eligible for Section 179 depreciation, he can get no benefit under Section 179.
But that is a distraction. A loss of $10 million reduces taxes $3.5 million. The other $6.5 million is out of pocket. No top notch accountant can go farther without violating tax law.
@Darin: I don’t do taxes but I have been down this road several times with businesses I’ve owned. I repeat, Cory’s treatment of Brennan’s purchase of Huset’s as a business expense in his premise is patently false. It is a capital expense which cannot be written off in the same year as Cory alludes. Also, any depreciation of assets that Brennan may have claimed on property that qualified for Section 179 or accelerated depreciation would be subject to “depreciation recapture” upon the resale of those assets.
Don,
As you know but I’m saying for clarification, anything depreciated is subject to recapture upon sale. Not just Seciton 179.
@Troy: I know. I was just trying to keep my replies focused on Darin’s Section 179 and accelerated depreciation claims.
Flipper, KBAD is not a direct competitor with the stations that came in ahead of it for ratings. This should go without saying, but some people listen to country, some to pop, some to rock, etc. KBAD did “just crush it” in the rock segment. The longtime rock station in SF, KRRO, is now an also ran. KBAD is a far better station than KRRO – and rock fans have figured that out in short order. KBAD brought in actual rock stars as DJs and poached some of the best staff from KRRO. Brennan has every right to brag about the radio station he built from scratch.
So Troy is thinking that Brennan probably didn’t make that much money on his payday loans in SD because there wasn’t that much competition.
What kind of business man are you, Troy? Of course business was good for him or he wouldn’t be making such a sob story out of the loan cap.
Jenny,
You read way too much into what I said. Nothing I’ve ever said or implied could be interpreted that I thought pay day loans weren’t profitable. Unprofitable businesses go out of business and there would have been no reason to pass this law.
I just think that $20 million of profit would attract more competition. Entrepreneurs open competitive fast food restaurants for a lot less profit than $20 million.
So let me check: whatever actual dollar figure a good accountant can squeeze out of Brennan’s expenses on Huset’s, Brennan got some reduction of his tax burden from those expenses that he would not have gotten from spending the same amount on a political campaign, right?